28.10.2016 Daily Market Analysis

The US dollar (USD) strengthened across the board on a largely volatile day in the markets.

Sentiment helped the USD but there was also upbeat economic news from the United States. Unemployment claims came in at 258,000, lower than the expected 261,000, and marked the first time in three weeks that the numbers came in lower. Pending Home Sales also rose 1.5%, higher than the expected 1.2 percent. Demand of the USD also picked up ahead of today’s release of advance quarter on quarter GDP figures. There has been positive data from the US in recent weeks and investors are clearly expecting solid GDP numbers.

Meanwhile, the British pound (GBP) experienced the most volatility, swinging both ways in intraday trading. The pound initially jumped higher as UK’s GDP expanded 0.5%, higher than the expected 0.3%, but still below the previous 0.7%. The numbers excited the market but investors were still not convinced on the UK economy with the ever-looming threat of the Brexit. The GBP later tumbled sharply following these concerns but the strong dollar also weighed in.

The euro (EUR) also mirrored GBP’s price action as it first surged higher on upbeat data. Spain’s Unemployment Rate decreased to 18.9%, better than the expected 19.3%, while the 10-year German – US yield spread increased. This supported the EUR but an overall strong dollar later weighed in on the currency.

There was no economic data from their respective countries, but the Australia dollar (AUD) and the New Zealand dollar (NZD) traded sharply lower against the dollar. The AUD has further been pressured in early Asian trading on Friday as quarter on quarter PPI shrank to 0.3%, worse than the expected 0.6%. There will also be no data from these countries today, so the AUD and NZD will take their cue from the US dollar. On the other hand, the Canadian dollar remained flat throughout the day, holding steady against the USD. With crude oil prices picking up bullish momentum, this may continue today.

The biggest news for today is surely theUS GDP numbers, but there will also be important data from Europe that traders will keep an eye on.